Crude oil fell to a five week low as the dollar strengthened against the euro, reducing the appeal of commodities as an alternative investment. Oil dropped as much as 1.9 percent as the U.S. currency gained against its major counterparts on speculation China will take further steps to cool its economy, discouraging demand for higher yielding assets. A U.S. Energy Department report tomorrow will probably show oil supplies rose last week, based on a Bloomberg News survey of analysts.
“It’s a further erosion of prices exacerbated somewhat by a stronger dollar today,” said Jason Schenker, president of Prestige Economics LLC, an Austin, Texas based energy consultant. “If we see another big build in crude tomorrow, I think you’ll just see the market move lower.”
Crude oil for March delivery dropped 63 cents, or 0.8 percent, to $74.63 a barrel at 10:15 a.m. on the New York Mercantile Exchange. Earlier, it touched $73.82 a barrel, the lowest since Dec. 22. Futures fell 8.8 percent in the two weeks through yesterday. The U.S. currency strengthened 0.6 percent to $1.4062 per euro as of 9:46 a.m. New York time, from $1.4151 yesterday.
Oil stockpiles probably climbed 1.58 million barrels in the week ended Jan. 22 from 330.6 million the prior week, according to the median of 18 analyst estimates in the survey of analysts. Oil inventories were 6.5 percent above the five year average in the week ended Jan. 15. Refining rates, already at their lowest outside the Atlantic hurricane season since at least 1989, probably fell 0.1 percentage point, according to the Bloomberg survey.....Read the entire article.
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